Amazon topped the day it crossed the trillion-dollar valuation threshold and is now down 20%. But also remember, at the peak, the stock had more than doubled in a year. Even after this decline, and after blow out earnings, the stock still trades at 161 times earnings.
As we know, Trump is leveling the playing field internationally,and domestically. And the tech giants, which have been priced like monopolies, are coming back down to Earth.
This correction gives us a chance to buy the broader stock market into a 10% correction, at 15 times earnings (cheaper than the long term average) in a 3% economy, with 20% year-over-year corporate earnings and corporate sales growth running double the rates of the past twenty years. Don’t run out of the store when stocks are on sale.
Finally, among the many interesting charts this week is gold. In the chart below, you can see gold has held the big trendline from that dates back to the inception of QE. With inflation finally showing some life, and with signficant wealth in Saudi Arabia looking for a safe hiding place, gold should be the natural winner.
